Retrospective recovery of excess salary from a retired employee is impermissible absent misrepresentation.

The petitioner was appointed as a Constable in the Provincial Armed Constabulary on 20 February 1984 and was subsequently transferred to the Civil Police, where he served as a Constable (Driver) and later as a Head Constable (Driver), a Class-III post. He retired on superannuation on 31 July 2025.

By notice dated 24 October 2024, the respondents sought an explanation regarding alleged erroneous fixation of the petitioner’s pay. The petitioner replied that he had not sought any increase in his pay scale and was nearing retirement with several financial liabilities.

Thereafter, by order dated 15 February 2025, the respondents retrospectively refixed his pay from ₹64,100 to ₹56,900 with effect from 1 July 2023, alleging that he had received an excess payment of ₹11,51,840. The amount was deducted from his retiral dues.

The respondents asserted that the petitioner had wrongly been granted the second promotional pay scale with effect from 10 November 2008 and the third Assured Career Progression benefit with effect from 10 November 2010, owing to an earlier punishment order dated 20 November 2006.

Whether the respondents could retrospectively refix the petitioner’s pay and effect recovery of alleged excess payments after approximately seventeen years, in the absence of any misrepresentation or fraud by the petitioner?

Whether the declaration or undertaking furnished by the petitioner at the time of retirement authorised recovery of excess salary allegedly paid due to an earlier erroneous pay fixation?

Whether the petitioner was entitled to refund of ₹11,51,840 deducted from his retiral dues, with interest?

The Court applied the principles in State of Punjab v. Rafiq Masih (White Washer), (2015) 4 SCC 334, under which recovery is ordinarily impermissible from Class-III/Class-IV employees, retired employees or employees due to retire within one year, and where excess payment has continued for more than five years; recovery is also impermissible where it would be inequitable, harsh or arbitrary.

Relying on Thomas Daniel v. State of Kerala, the Court reiterated that excess payment made without employee misrepresentation or fraud, owing to the employer’s wrong interpretation or application of rules, should generally not be recovered, particularly where recovery would cause hardship.

The Court further relied on Jagdish Prasad Singh v. State of Bihar, which held that reduction of pay and recovery of excess amounts cannot ordinarily be applied retrospectively after a long delay.

Under Head Constable Prahlad Singh v. State of U.P., an undertaking furnished at retirement concerning excess pension or retiral-benefit computation does not authorise retrospective reopening of pay fixation or recovery of salary paid for years due to the employer’s error.

The Court also invoked the principles concerning protection of pension and gratuity as earned property and the financial dignity of retired employees under Articles 21 and 300-A of the Constitution, as discussed in Sampat Singh v. State of U.P.

The Court found that the respondents did not allege or establish that the petitioner had committed any misrepresentation, fraud or other wrongdoing in relation to the pay fixation.

The alleged error had occurred in 2008, whereas corrective action was taken only in 2025—after approximately seventeen years. The petitioner was a Class-III employee and had retired by the time the recovery was made, bringing the case within the categories identified in Rafiq Masih where recovery is ordinarily impermissible.

The long-standing payment was attributable to the respondents’ own erroneous pay fixation, and not to any independent claim or fraudulent conduct by the petitioner.

The Court further held that any declaration obtained at retirement could relate only to the computation of pension and other retiral benefits and could not be treated as consent to a retrospective re-fixation of salary or recovery of salary paid over a prolonged period.

In these circumstances, recovery of ₹11,51,840 from the petitioner’s retiral dues was held to be inequitable and legally unsustainable.

It issued a mandamus directing the respondents to refund ₹11,51,840 deducted from the petitioner’s retiral dues, together with 7% simple interest from the date of deduction until actual payment.

The respondents were directed to complete the exercise within six weeks from the date of judgment.